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Jim Rickards

Putin’s speech was classic Putin — nationalistic, did not give any ground and not conciliatory at all.

Putin stated that Crimea was a historic part of Russia.

The confrontation between Russia and the United States, in particular, will continue. Europe is caught in the middle. Europe doesn’t really want the sanctions — Russia is an important trading partner and big supplier of natural resources.

Europe doesn’t really want this fight but the US is dragging them along.

It will be more of the same. In time, the eastern Ukraine will be peeled off and become the Russian Federation’s.

RUSSIAN RUBLE

The ruble might get a little worse, but not a lot worse.

1. Europe doesn’t really want to add on to the sanctions.

2. Russia has very little external debt and has added quite a bit of gold.

OIL

The price of oil is getting close to a bottom.

$60 US is probably the bottom.

Russia is caught in the middle between Arabian factions of OPEC and the US producers. What the Arabs want to do is to get the price low enough to hurt the US, but not so low that they hurt themselves.

You can calculate that sweet spot and it’s around $60 a barell.

JAPANESE YEN

The question is, “Why are they cheapening the yen?”

It has very little to do with promoting exports and has everything to do with importing inflation.

The Japanese are desperate for inflation. Deflation increases the real value of their debt and they’ve got a 200% debt-to-GDP ratio. So they need some inflation.

They originally started out saying that cheapening the euro would import inflation by increasing energy prices. The problem is that the US dollar price of energy has collapsed for reasons that have nothing to do with Japan.

So they’re fighting a losing battle.

Getting the yen to 100 or 120 to the US dollar is barely enough to compensate for the collapse of the US energy price. They’ve got to get to 140, and probably even lower than that, to get the kind of inflation they want, given the role of energy as a percentage of GDP.